Dow Jones futures rose modestly early Friday, fueled by a soaring Nike stock. S&P 500 futures and Nasdaq futures advanced slightly after a strong session for the stock market rally.
XFedEx (FDX) and Nike (NKE) were key movers on earnings overnight while JPMorgan Chase (JPM), Goldman Sachs (GS) and other big financials passed annual stress tests.
The Dow Jones led Thursday's gain as President Joe Biden announced a $1 trillion infrastructure deal with a bipartisan group of senators. That lifted Dow component Caterpillar (CAT) as well as a variety of infrastructure-related stocks and ETFs, including Martin Marietta Materials (MLM) and Global X U.S. Infrastructure Development ETF (PAVE).
The S&P 500 definitely cleared its June 14 peak, joining the Nasdaq in new-high ground.
Several stocks broke out Thursday, including chipmakers Lattice Semiconductor (LSCC) and Kulicke & Soffa (KLIC) as well as Victoria's Secret parent L Brands (LB). Meanwhile, Align Technology (ALGN) and MLM stock offered early entries.
Google will delay phasing out internet tracking cookies until mid-to-late 2023 vs. prior plans for early 2022. That reprieve sent digital ad firms soaring, with double-digit gains for Trade Desk (TTD) and Criteo (CRTO).
As for Google parent Alphabet (GOOGL), shares edged up 0.3% to 2,450. But Google stock is in a buy zone, just above a 2,431.48 flat-base entry.
Google stock is on IBD Leaderboard and IBD Long-Term Leaders. Align stock is on SwingTrader.
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Infrastructure Deal
President Biden said he reached a deal with a bipartisan group of senators on an infrastructure package. It includes $579 billion in new spending, with $312 billion for transportation. Hopes for an infrastructure deal had grown in recent days.
There's not yet an agreement on how to pay for it. Biden has ruled out gas tax hikes while Republicans oppose corporate tax hikes, as the president originally proposed.
With 21 centrist senators on board, including 11 Republicans, this infrastructure deal has broad support.
House Speaker Nancy Pelosi says passage will depend on the Senate agreeing to a new reconciliation bill to pave the way for other Biden agenda items. This includes another spending package topping $1 trillion, including many items cut out of Biden's original infrastructure plans. Capital gains and corporate income tax hikes are still very much on the table.
For now, an infrastructure deal is definitely a positive for heavy construction, materials and other infrastructure-related sectors. Caterpillar gained 2.6%, a strong performer for the Dow Jones on Thursday. CAT stock is now up 5% for the week. But that's after plunging 5.4% last week and 9.6% in the prior week.
Nike Earnings
Nike earnings crushed views, reversing a year-earlier loss, as fiscal fourth-quarter revenue spiked 96% to $12.3 billion. North American sales shot up 141% to $5.4 billion. China sales rose despite calls for a boycott there, as well as somewhat tougher year-earlier comparisons.
On the Nike earnings call, the Dow Jones giant forecast sales topping $50 billion in the new fiscal year, above views for roughly $48.5 billion.
Nike stock jumped 13% before the open to about 151. That signals a breakout above a 148.05 buy point, surging from the 50-day and 200-day lines.
The athletic apparel giant has ground lower in 2021, lagging the broader stock market rally considerably. But that may be about to change.
FedEx Earnings
FedEx earnings shot up 98% while revenue growth accelerated for a fourth straight quarter. But earnings were only in line with views. FedEx stock fell 4% overnight, signaling a move below its 50-day line. FDX had rallied 2.1% to 303.69 on Thursday, bouncing from the 50-day line.
Archrival UPS (UPS) retreated slightly before the open, signaling a test of the 50-day line. UPS stock had risen 1% on Thursday.
Bank Stress Tests
The Federal Reserve said all 23 big lenders easily passed this year's bank stress tests. The Fed will lift all restrictions on shareholder returns as of June 30, giving the green light for further buybacks and dividend hikes from the likes of JPMorgan, Goldman Sachs and more.
The news came as no surprise.
JPM stock and GS stock rose a fraction before the open.
Dow Jones Futures Today
Dow Jones futures rose 0.4% vs. fair value. S&P 500 futures climbed 0.1%. Nasdaq 100 futures advanced 0.1%. Nike, JPMorgan and Goldman Sachs are all Dow Jones and S&P 500 components.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally Thursday
The stock market rally had a broad-based advance. The Dow Jones Industrial Average climbed 0.95% in Thursday's stock market trading. The S&P 500 index gained 0.6%. The Nasdaq composite climbed 0.7%, though it closed in the lower half of its range as investors shifted toward infrastructure plays. The Russell 2000 popped 1.4%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 1.3%, while the Innovator IBD Breakout Opportunities ETF (BOUT) advanced 0.7%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.9%. The VanEck Vectors Semiconductor ETF (SMH) rallied 1.6%.
SPDR S&P Metals & Mining ETF (XME) leapt 2.9% and Global X U.S. Infrastructure Development ETF (PAVE) 1.5%. U.S. Global Jets ETF (JETS) dipped 0.2%. SPDR S&P Homebuilders ETF (XHB) edged up 0.4%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) gained 1.4% and ARK Genomics ETF (ARKG) 1.2%, both continuing a strong run.
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Stocks Entering Buy Zones
Lattice stock rose 4.7% to 55.53, clearing a 53.89 cup-with-handle buy point, according to MarketSmith. But volume was well below average.
KLIC stock popped 6.6% to 59.14, also moving past a cup-with-handle entry but in heavy trade. The buy point is 57.60.
L Brands stock climbed 1.5% to 72.14, just clearing a 72.09 buy point from a flat base. LB stock offered an early entry on Tuesday as it reclaimed its 50-day line.
ALGN stock cleared a key resistance area and an almost-handle, rising 1.9% to 617.39. Investors could use 617.21 as the early entry. Align stock has a 647.30 official buy point.
MLM stock climbed 2.6% to 358.96 breaking a trend line and just reclaiming its 50-day line. That's offering an early entry, though investors might want to see a bit of separation from the 50-day line. MLM stock has an official buy point of 383.81.
Market Rally Analysis
The stock market rally showed broad-based gains Thursday. While the Nasdaq backed off its morning high, it still rose for a fourth straight session, setting fresh all-time highs. The S&P 500 hit a closing high after after briefly setting intraday peaks in the prior two sessions. The Russell 2000 made another solid advance, closing in on new-high ground.
The Dow Jones closed a whisker below its 50-day line. Dow futures suggest blue chips will open above that key level on Friday.
The stock market rally is starting to look like a tech-led, broad-based advance. That's just about ideal for active investors, who tend to focus on techs and other growth stocks. This could be a golden opportunity for gains, assuming this advance lasts for several weeks or months.
But that's the $64,000 question (or $64 million, depending on your portfolio's size). Just a week ago the Dow Jones, S&P 500 and Russell 2000 were all below their 50-day lines, with financials and miners suffering huge losses.
So while investors should be taking advantage of this positive trend, don't be complacent. Stay alert and be ready to shift gears again.
Continue to have some diversity in your portfolio, with leading stocks from a variety of sectors. Not only will that protect you from a sector-specific tumble, but it'll keep you alert for bullish trends out of technology.
That's also a reason to continue to have a diverse watchlist.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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